Is contracting better than permanent employment?

If you stack shelves at Sports Direct, you almost certainly would rather be a permanent employee with all the rights and protection that offers. However, for those who work in IT, could contracting be a better option than permanent employment?

The appeal of contracting is certainly very seductive.

Contractors in the Europe can often earn twice as much as their permanent counterparts, and contractors are paid a hefty premium in the rest of the world as well. In the UK, the Conservative government recently introduced a new small business owner tax, but even after this it can still be an alluring option.

Of course, life is not all about how much money you can earn. But many IT professionals see contracting as an opportunity to take more time off, having regular breaks between contracts to travel or spend time with their family.

Some contractors also enjoy the feeling of being their own boss. The increased freedom and classification of self-employment can be empowering to some, giving them a greater feeling of control over their career.

There are downsides though. Prime among them being job security. Contractors are the first out of the door when a company is struggling, often with little or no notice. After all, they are not employees but merely an external resource the company is hiring in.

There is no sick pay either: if you do not work, you do not get paid. Indeed many of the trappings of employment contractors must sort out for themselves including insurance, pensions and parental leave.

Then there is the headache of figuring out what you are doing. The would-be contractor needs to establish their own limited company, complete all the paperwork and avoid the many costly pitfalls that are hidden along the way.

However, one company is trying to take the stress out of the whole process. The IT Contracting Master Class aims to provide a one-stop-shop for people to gain all of the skills they need to make the transition from permanent to contractor.

One thing is for sure though: with the continued growth of the IT industry, and under supply of IT professionals, the market for both permanent employees and contractors will remain lucrative for a long time to come.

Published on 17 February 2017.

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